Market Research, Student Style

One thing's for certain: this is not your father's market-research firm. Cofounders Scott Galloway, 28, and R. Ian Chaplin, 32, like to use the latest buzzword to describe their start-up, Prophet Market Research -- they call it a virtual market-research firm. Virtual or not, Prophet certainly exemplifies today's trend toward low-overhead high-tech business: its headquarters are in the founders' San Francisco homes, and most of its workers are M.B.A. or Ph.D. candidates on 40 campuses nationwide.

The company originated in a market-research project Galloway and Chaplin did for Yamaha while still M.B.A. students at the University of California at Berkeley. With assistance from Berkeley's entrepreneurship center, the two launched Prophet with $100,000 after they graduated, in 1992. Prophet's student researchers, who are available for hire on a contract basis, provide the company with "an entirely flexible work force," notes Galloway, and enable it to maintain a variable cost to fixed cost ratio of 85% to 15%. An additional bonus is that the students come with "amazing backgrounds," he says -- not to mention health insurance, provided by their universities.

To inform the students of assignments, Prophet sends electronic mail via the Internet network. Then, using overnight mail, the company ships its researchers laptops already loaded with the appropriate industry overview and project parameters. Modems enable field data gathered in the morning to be analyzed at headquarters that afternoon. "It's very Mission Impossible-like," says Galloway. Galloway and Chaplin say the company is profitable, and they expect 1993 revenues to reach $800,000 -- double the revenues of their first year in business.